Reykjavík is believed to be the location of the first permanent settlement in Iceland, which, according to Ingólfr Arnarson, was established in AD 874. Until the 19th century, there was no urban development in the city location. The city was founded in 1786 as an official trading town and grew steadily over the following decades, as it transformed into a regional and later national centre of commerce, population, and governmental activities. It is among the cleanest, greenest, and safest cities in the world.[7][8][9]

The first permanent settlement in Iceland by Norsemen is believed to have been established at Reykjavík by Ingólfr Arnarson around AD 870; this is described in Landnámabók, or the Book of Settlement. Ingólfur Arnarson is said to have decided the location of his settlement using a traditional Norse method; he cast his high seat pillars (Öndvegissúlur) into the ocean when he saw the coastline, then settled where the pillars came to shore.
The story about the pillars is dubious to many people[who?]. He obviously settled near the hot springs to keep warm in the winter and would not have determined it by happenstance. Furthermore the probability of the pillars drifting to that location from where they were said to have been thrown from the boat seems improbable. Nevertheless that is what the Landnamabok says and says furthermore that Ingolf's pillars are still to be found in a house there in town.
Steam from hot springs in the region is said to have inspired Reykjavík's name, which loosely translates to Smoke Cove (the city is sometimes referred to as Bay of Smoke or Smoky Bay in English language travel guides).[10][11]
In the modern language, as in English, the word for 'smoke' and the word for fog or steamy vapour are not commonly confused but this is believed to have been the case in the old language.
The original name was Reykjarvík with an additional "r" that had vanished around 1800.[12]

The Reykjavík area was farmland until the 18th century. In 1752, the King of Denmark, Frederik V, donated the estate of Reykjavík to the Innréttingar Corporation; the name comes from the Danish language word indretninger, meaning institution. The leader of this movement was Skúli Magnússon [is]. In the 1750s, several houses were built to house the wool industry, which was Reykjavík's most important employer for a few decades and the original reason for its existence. Other industries were undertaken by the Innréttingar, such as fisheries, sulphur mining, agriculture, and shipbuilding.[13]

The Danish Crown abolished monopoly trading in 1786 and granted six communities around the country an exclusive trading charter. Reykjavík was one of them and the only one to hold on to the charter permanently. 1786 is thus regarded as the date of the city's founding. Trading rights were limited to subjects of the Danish Crown, and Danish traders continued to dominate trade in Iceland. Over the following decades, their business in Iceland expanded. After 1880, free trade was expanded to all nationalities, and the influence of Icelandic merchants started to grow.

Icelandic nationalist sentiment gained influence in the 19th century, and the idea of Icelandic independence became widespread. Reykjavík, as Iceland's only city, was central to such ideas. Advocates of an independent Iceland realized that a strong Reykjavík was fundamental to that objective. All the important events in the history of the independence struggle were important to Reykjavík as well. In 1845 Alþingi, the general assembly formed in 930 AD, was re-established in Reykjavík; it had been suspended a few decades earlier when it was located at Þingvellir. At the time it functioned only as an advisory assembly, advising the King about Icelandic affairs. The location of Alþingi in Reykjavík effectively established the city as the capital of Iceland.

In 1874, Iceland was given a constitution; with it, Alþingi gained some limited legislative powers and in essence became the institution that it is today. The next step was to move most of the executive power to Iceland: Home Rule was granted in 1904 when the office of Minister For Iceland was established in Reykjavík. The biggest step towards an independent Iceland was taken on 1 December 1918 when Iceland became a sovereign country under the Crown of Denmark, the Kingdom of Iceland.

By the 1920s and 1930s most of the growing Icelandic fishing trawler fleet sailed from Reykjavík; cod production was its main industry, but the Great Depression hit Reykjavík hard with unemployment, and labour union struggles sometimes became violent.

On the morning of 10 May 1940, following the German occupation of Denmark and Norway on 9 April 1940, four British warships approached Reykjavík and anchored in the harbour. In a few hours, the alliedoccupation of Reykjavík was complete. There was no armed resistance, and taxi and truck drivers even assisted the invasion force, which initially had no motor vehicles. The Icelandic government had received many requests from the British government to consent to the occupation, but it always declined on the basis of the Neutrality Policy. For the remaining years of World War II, British and later American soldiers occupied camps in Reykjavík, and the number of foreign soldiers in Reykjavík became about the same as the local population of the city. The Royal Regiment of Canada formed part of the garrison in Iceland during the early part of the war.

The economic effects of the occupation were positive for Reykjavík: the unemployment of the Depression years vanished, and construction work began. The British built Reykjavík Airport, which is still in service today, mostly serving domestic flights. The Americans, meanwhile, built Keflavík Airport, situated 50 km (31 mi) west of Reykjavík, which became Iceland's primary international airport. In 1944, the Republic of Iceland was founded and a president, elected by the people, replaced the King; the office of the president was placed in Reykjavík.

In the post-war years, the growth of Reykjavík accelerated. An exodus from the rural countryside began, largely because improved technology in agriculture reduced the need for manpower, and because of a population boom resulting from better living conditions in the country. A once primitive village was rapidly transformed into a modern city. Private cars became common, and modern apartment complexes rose in the expanding suburbs.

Reykjavík is located in the southwest of Iceland. The Reykjavík area coastline is characterized by peninsulas, coves, straits, and islands.

During the Ice Age (up to 10,000 years ago) a large glacier covered parts of the city area, reaching as far out as Álftanes. Other parts of the city area were covered by sea water. In the warm periods and at the end of the Ice Age, some hills like Öskjuhlíð were islands. The former sea level is indicated by sediments (with clams) reaching (at Öskjuhlíð, for example) as far as 43 m (141 ft) above the current sea level. The hills of Öskjuhlíð and Skólavörðuholt appear to be the remains of former shield volcanoes which were active during the warm periods of the Ice Age. After the Ice Age, the land rose as the heavy load of the glaciers fell away, and began to look as it does today.

The capital city area continued to be shaped by earthquakes and volcanic eruptions, like the one 4,500 years ago in the mountain range Bláfjöll, when the lava coming down the Elliðaá valley reached the sea at the bay of Elliðavogur.

The largest river to run through Reykjavík is the Elliðaá River, which is non-navigable. It is one of the best salmon fishing rivers in the country. Mount Esja, at 914 m (2,999 ft), is the highest mountain in the vicinity of Reykjavík.

The city of Reykjavík is mostly located on the Seltjarnarnes peninsula, but the suburbs reach far out to the south and east. Reykjavík is a spread-out city: most of its urban area consists of low-density suburbs, and houses are usually widely spaced. The outer residential neighbourhoods are also widely spaced from each other; in between them are the main traffic arteries and a lot of empty space.

Panorama of Reykjavík seen from Perlan with the mountains Akrafjall (middle) and Esja (right) in the background

Panorama of Reykjavík seen from Perlan at sunset in summer. As seen in the picture, Reykjavík is mild enough for trees to grow.

Despite its northern latitude, temperatures very rarely drop below −15 °C (5 °F) in the winter. The proximity to the Arctic Circle and the strong moderation of the Atlantic Ocean in the Icelandic coast (influence of North Atlantic Current, an extension of the Gulf Stream) shape a very cool but not rigorous winter without a real summer. The city's coastal location does make it prone to wind, however, and gales are common in winter.[citation needed] Summers are cool, with temperatures fluctuating between 10 and 15 °C (50 and 59 °F), rarely exceeding 20 °C (68 °F). Reykjavík averages 147 days[17] at the threshold of 1 mm per year. Droughts are uncommon, although they occur in some summers. In the summer of 2007, no rain was measured for one month. Summer tends to be the sunniest season, although May receives the most sunshine of any individual month. Overall, the city receives around 1,300 annual hours of sunshine,[18] which is comparable with other places in Northern and North-Western Europe such as Ireland and Scotland, but substantially less than equally Northern regions with a more continental climate, including Finland. Nonetheless, Reykjavik is one of the cloudiest and coolest capitals of any nation in the world. The highest ever recorded temperature in Reykjavík was 25.7 °C (78 °F), recorded on July 30, 2008,[19] while the lowest ever recorded temperature was −19.7 °C (−3 °F), recorded on January 30, 1971.[20]

The Reykjavík City Council governs the city of Reykjavík[24] and is directly elected by those aged over 18 domiciled in the city. The council has 15 members who are elected using the open list method for four year terms.

The council selects members of boards, and each board controls a different field under the city council's authority. The most important board is the City Board that wields the executive rights along with the City Mayor. The City Mayor is the senior public official and also the director of city operations. Other public officials control city institutions under the mayor's authority. Thus, the administration consists of two different parts:

The political power of City Council cascading down to other boards

Public officials under the authority of the city mayor who administer and manage implementation of policy.

The Independence Party was historically the city's ruling party; it had an overall majority from its establishment in 1929 until 1978, when it narrowly lost. From 1978 until 1982, there was a three-party coalition composed of the People's Alliance, the Social Democratic Party, and the Progressive Party. In 1982, the Independence Party regained an overall majority, which it held for three consecutive terms. The 1994 election was won by Reykjavíkurlistinn (the R-list), an alliance of Icelandic socialist parties, led by Ingibjörg Sólrún Gísladóttir. This alliance won a majority in three consecutive elections, but was dissolved for the 2006 election when five different parties were on the ballot. The Independence Party won seven seats, and together with the one Progressive Party they were able to form a new majority in the council which took over in June 2006.

In October 2007 a new majority was formed on the council, consisting of members of the Progressive Party, the Social Democratic Alliance, the Left-Greens and the F-list (liberals and independents), after controversy regarding REI, a subsidiary of OR, the city's energy company. However three months later the F-list formed a new majority together with the Independence Party. Ólafur F. Magnússon, the leader of the F-list, was elected mayor on 24 January 2008, and in March 2009 the Independence Party was due to appoint a new mayor. This changed once again on 14 August 2008 when the fourth coalition of the term was formed, by the Independence Party and the Social Democratic Alliance, with Hanna Birna Kristjánsdóttir becoming mayor.

The mayor is appointed by the city council; usually one of the council members is chosen, but they may also appoint a mayor who is not a member of the council.

The post was created in 1907 and advertised in 1908. Two applications were received, from Páll Einarsson, sheriff and town mayor of Hafnarfjörður and from Knud Zimsen, town councillor in Reykjavík. Páll was appointed on 7 May and was mayor for six years. At that time the city mayor received a salary of 4500 ISK per year and 1500 ISK for office expenses. The current mayor is Dagur B. Eggertsson.[26]

Reykjavík is the largest and most populous settlement in Iceland. The municipality of Reykjavík had a population of 128,793 on 1 January 2019; that is 36% of the country's population. The Capital Region, which includes the capital and six municipalities around it, was home to 228,231 people; that is over 63% of the country's population.[28]

On 1 January 2018, of the city's population of 126,041, immigrants of the first and second generation numbered 20,910 (16.6%)[29][30]
The most common foreign citizens were Poles, Lithuanians, and Latvians.[28]

Children of foreign origin form a more considerable minority in the city's schools: as many as a third in places.[31] The city is also visited by thousands of tourists, students, and other temporary residents, at times outnumbering natives in the city centre.[32]

Borgartún is the financial centre of Reykjavík, hosting a large number of companies and three investment banks.

Old whaling ships Hvalur 6, 7, 8 and 9

Reykjavík has been at the centre of Iceland's economic growth and subsequent economic contraction over the 2000s, a period referred to in foreign media as the "Nordic Tiger" years,[33][34] or "Iceland's Boom Years".[35] The economic boom led to a sharp increase in construction, with large redevelopment projects such as Harpa concert hall and conference centre and others. Many of these projects came to a screeching halt in the following economic crash of 2008.

Per capita car ownership in Iceland is among the highest in the world at roughly 522 vehicles per 1,000 residents,[36] though Reykjavík is not severely affected by congestion. Several multi-lane highways (mainly dual carriageways) run between the most heavily populated areas and most frequently driven routes. Parking spaces are also plentiful in most areas. Public transportation consists of a bus system called Strætó bs. Route 1 (the Ring Road) runs through the city outskirts and connects the city to the rest of Iceland.

Reykjavík Airport, the second largest airport in the country (after Keflavík International Airport), is positioned inside the city, just south of the city centre. It is mainly used for domestic flights, as well as flights to Greenland and the Faroe Islands. Since 1962, there has been some controversy regarding the location of the airport, since it takes up a lot of valuable space in central Reykjavík.

Reykjavík has two seaports, the old harbour near the city centre which is mainly used by fishermen and cruise ships, and Sundahöfn in the east city which is the largest cargo port in the country.

Two steam locomotives were used to build the harbour Reykjavík Docks railway; both are now on display in Reykjavík.

There are no public railways in Iceland, because of its sparse population, but the locomotives used to build the docks are on display. Proposals have been made for a high speed rail link between the city and Keflavík.

Volcanic activity provides Reykjavík with geothermal heating systems for both residential and industrial districts. In 2008, natural hot water was used to heat roughly 90% of all buildings in Iceland.[37] Of total annual use of geothermal energy of 39 PJ, space heating accounted for 48%.

Safnahúsið (the Culture House) was opened in 1909 and has a number of important exhibits. Originally built to house the National Library and National Archives and also previously the location of the National Museum and Natural History Museum, in 2000 it was re-modeled to promote the Icelandic national heritage. Many of Iceland's national treasures are on display, such as the Poetic Edda, and the Sagas in their original manuscripts. There are also changing exhibitions of various topics.[39]

Reykjavík is famous for its weekend nightlife. Icelanders tend to go out late, so bars that look rather quiet can fill up suddenly—usually after midnight on a weekend.

Alcohol is expensive at bars. People tend to drink at home before going out. Beer was banned in Iceland until 1 March 1989 but has since become popular among many Icelanders as their alcoholic drink of choice.[40]

There are over 100 different bars and clubs in Reykjavík;[citation needed] most of them are located on Laugavegur and its side streets. It is very common for an establishment that is a café before dinner to turn into a bar in the evening. Closing time is usually around 4:30 am on weekends and 1 am during the week at the most well known hospitality venues.

The arrival of the new year is a particular cause for celebration to the people of Reykjavík. Icelandic law states that anyone may purchase and use fireworks during a certain period around New Year's Eve. As a result, every New Year's Eve the city is lit up with fireworks displays.

Reykjavik Golf Club was established in 1934. It is the oldest and largest golf club in Iceland. It consists of two 18-hole courses - one at Grafarholt and the other at Korpa. The Grafarholt golf course opened in 1963, which makes it the oldest 18-hole golf course in Iceland. The Korpa golf course opened in 1997.[41]